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The Tatad vs. Garcia case involved a contract awarded to a Hong Kong corporation, EDSA LRT Corporation, Ltd., to build a light rail transit line along EDSA in the Philippines. Petitioners argued this violated the constitution as a foreign corporation cannot own a public utility. The Supreme Court ruled that while the corporation owned the rail tracks and other facilities, it would turn them over to the DOTC to operate, so it was not operating a public utility itself. Ownership of facilities used for public utilities does not alone constitute operating a public utility, which requires a franchise.
The Tatad vs. Garcia case involved a contract awarded to a Hong Kong corporation, EDSA LRT Corporation, Ltd., to build a light rail transit line along EDSA in the Philippines. Petitioners argued this violated the constitution as a foreign corporation cannot own a public utility. The Supreme Court ruled that while the corporation owned the rail tracks and other facilities, it would turn them over to the DOTC to operate, so it was not operating a public utility itself. Ownership of facilities used for public utilities does not alone constitute operating a public utility, which requires a franchise.
The Tatad vs. Garcia case involved a contract awarded to a Hong Kong corporation, EDSA LRT Corporation, Ltd., to build a light rail transit line along EDSA in the Philippines. Petitioners argued this violated the constitution as a foreign corporation cannot own a public utility. The Supreme Court ruled that while the corporation owned the rail tracks and other facilities, it would turn them over to the DOTC to operate, so it was not operating a public utility itself. Ownership of facilities used for public utilities does not alone constitute operating a public utility, which requires a franchise.
Tatad vs. Garcia 241 SCRA 334, GR. No. 114222. April 6, 1995 Facts: DOTC planned to construct a light railway transit line along Edsa. EDSA LRT Corporation, Ltd., a foreign corporation was awarded the contract to build, lease and transfer the said light railway. The said award was questioned by the petitioners on the basis that a foreign corporation cannot own the EDSA LRT III, a public utility as it violates the Constitution. Issue: Whether or not an owner and lessor of the facilities used by a public utility constitute a public utility? Held: EDSA LRT Corporation, Ltd. Is admittedly a foreign corporation duly incorporated and existing under the laws of Hong Kong. However, there is no dispute that once the EDSA LRT III is constructed, the private respondent, as lessor, will turn it over to DOTC as lessee, for the latter to operate the system and pay rentals for the said use. What private respondent owns are the rail tracks, rolling stocks, rail stations, terminals and the power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do not themselves constitute a public utility. What constitutes a public utility in not their ownership but their use to serve the public. The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility. However, it does not require a franchise before one can own the facilities needed to operate a public utility so long as it does not operate them to serve the public. In law, there is a clear distinction between the operation of a public utility and the ownership of the facilities and the equipment used to serve the public.